'The best thing about this Budget is that it's over'

Those with property worth more than £2 million may disagree, but the Chancellor's Budget came and went without many of the heavy-handed interventions the mortgage industry had feared. 

Yet underneath the post-speech relief lies a sense that this much-hyped Budget did not do enough to address the economic pressures that could weigh on borrowing, sentiment and investment. 

READ MORE: New property tax is 'deeply damaging and counterproductive'  

Kessar Salimi, Mortgage & Protection Consultant at Freedom Financial, noted that "it could have been a lot worse," with advisers braced for more severe measures. The increased tax on rental income and dividends, and a new "Mansion Tax" on property worth more than £2 million and £5 million hardly prompted festive cheer. But Salimi said the absence of the proposed national insurance on rental income means the market avoided immediate disruption. 

He added that the "budget is less drastic than initially thought" and should not unduly affect the property market. However, he warned that "growth is lower and inflation is higher than expected, which could keep interest rates higher for longer." 

Tax system needs simplification 

Others saw the Budget as emblematic of deeper structural challenges. Graham McClelland, pictured above left, chief executive of Gen H, said: "There is a lot here that matches both my expectations and some of my worst fears." 

Where the Chancellor did intervene, several industry figures argued the changes intensified rather than eased the burden of complexity. McClelland warned: "The tax system needs simplification, not additional complexity. This very much falls into the latter camp. Layering complexity does not improve productivity, except perhaps for tax lawyers and accountants, and no one wants them to be the winners." 

He also pointed out that frozen tax thresholds continue to influence household budgets, even if "this is not unique to property." 

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Landlords escaped the more aggressive measures rumoured in the run-up to the announcement, yet were still hit by a 2 per cent rise in property and dividend income. It is a further squeeze on a tight market, and Salimi expects that "landlords are likely to review their investments going forward to see if they remain viable." 

McClelland warned that recent and ongoing tax adjustments will likely push rents higher but could increase supply for owner-occupiers. 

Overall, however, the light touch on housing policy was notable, with McClelland observing that "there does not seem to be a huge amount good or bad at first glance." 

Markets stable 

For mortgage pricing, the decisive factor in the months ahead will remain the cost of borrowing and broader financial stability. Matthew Arena, pictured above right, of Brilliant Group, said: "This is the largest tax-raising budget for some time, intended to stabilise the cost of government borrowing. Stability is key. For all the incentive changes at the micro-level—the mansion tax and the property income taxes—it is actually the cost of borrowing that is so important for the market as a whole, and at the moment, the markets are stable, which is positive." 

Overall, Arena expects only limited shifts in housing dynamics. "It is set to deliver slightly higher rents, a marginal cooling on prices for higher-value properties, but should offer continued stability." 

Whilst the housing sector wiped their brow in relief, the general mood music post-Budget was that it did little to lift business sentiment, according to Fred Soneya, co-founder and general partner at Haatch. He said: "The best thing we can say about this Budget is that it's over." He added that the prolonged speculation beforehand had been damaging: "All the noise and speculation in recent months have been damaging to business and investor confidence. Uncertainty creates anxiety, which stifles innovation and hinders growth." 

With no movement on corporation tax, national insurance or business rates, Soneya added that even modest hopes went unmet. "There still is not much to celebrate," he said. 

Charlie Wells, managing director of buying agency Prime Purchase, said the speech was a huge anti-climax after months of speculation. "Never has so much been said about so little," he said. "The Budget has been discussed ad nauseam over the past few months; leak upon leak has put fear into us all, and it has created paralysis for the economy. And yet after all that, the Budget seems to have done nothing to move the dial one way or the other on property." 

The verdict 

This Budget may end up being remembered more for what it avoided than for what it introduced. For brokers and lenders, its chief virtue was restraint. Yet relief should not be mistaken for renewed confidence. 

Stubborn inflation, a more complex tax landscape and landlords reassessing their positions ensure the market enters the spring with stability, but with little obvious fresh momentum.